Weekly Trend Report 01/03/21

WEEKLY TREND REPORT
SUNDAY, JANUARY 3, 2021

WEEKLY CLOSING PRICES AND PERFORMANCE
$SPX       3756.07     +1.43%
$NDX   12888.28     +1.39%
10-y UST       .917        -.011
Gold         1895.10       +.63%
WTI oil        48.52       +.60%

WEEKLY VIDEO  https://us02web.zoom.us/rec/share/wXLEf9u_d0eRV_ecf8FZxek2g_RdwgVwppUz0L_zPuyxetxAvPH6EwxlTAiiwOhc.aQLxyKd8-L4c9zjJ?startTime=1609692343000

MARKETS OVERVIEW

• Major equity markets were higher on the shortened holiday week.
• There were new all-time highs and weekly closing highs in $SPX, $NDX, $INDU, Emerging Markets (EEM), Europe (VGK), and Nifty.
• Small caps (IWM) traded to a new high, but did not close there.
• There were new ETF highs (52 weeks or longer) in ASHR, EEM, INDA, LIT, QCLN, QQQ, SPY, XLB, XLY and XME.
• Gold Miners (GDX) made a bearish 10/40-week sma cross, indicating declining trend momentum, and is something that we are monitoring this week.

MARKET INTERNALS

• VIX        22.75, elevated.
  
• NYMO   -2.65, neutral, mildly constructive.
• P/C           .86, just below neutral.

TOP 10 FOCUS INDUSTRY GROUPS OVERVIEW

Note: A list of top ranked stocks by sector can be seen here: https://bluechipdaily.com/members/this-weeks-best-ideas-list/

1. Technology & Communication Services

• QQQ was +1.35% on the week and XLK was +.15%.
• Mega caps were led by strong weeks in AMZN, TSLA, V, TSM, MA and DIS.
• Overall tech and communications services finished the year strong and in major uptrends.
• I am curious to see how the first few days and next week trades ere and in all sectors and stocks.
• Cloud, semis, online gaming, clean energy and 5G are leading industries, among others.
• CORE MEGA CAPS
  

2. Industrials

• XLI was quiet at +.63%% on the week.
• We continue to see a longer-term cyclical recovery underway, and industrials are a key focus group.
• There are three groups that we are focused on here:
• Stocks in major uptrends, such as CAT, DE, GE, and HON.
• Recovery groups such as airlines and aerospace/defense, AAL, BA and UAL.
• Renewable energy industrials, which are more more volatile and speculative: PLUG, BE, FCEL.

3. Basic Materials

• Basic materials continues to show very strong uptrends as well, although the group can be volatile.
• XME was +.2.58% on the week and XLB was +1.13%.
• Industrial metals and mining (XME) continue to be one of our top ranked industries.
• Materials (XLB) is lower volatility, but offers constructive uptrends as well.
• Agriculture, chemicals, copper, fertilizer, lithium, metals, mining, steel are top focus groups.
• AVTR, ALB, CLF, DD, DOW, FCX, MOS, MT, NTR and VALE, among others, are top longer term ideas.

4. Financials

• Financials remain as one of our top recovery sectors here and coming into 2021.
• XLF was +1.83% on the week and KRE was +.97% for the week. Both made 10-month closing highs.
• BAC, C and JPM are our ‘core’ major banking ideas and WFC is a top recovery idea.
• Regional banks and consumer finance are also set up well. ALLY, COF, DFS, CFG, FITB, RF and USB are technical favorites.
• As long as the charts are trending higher, and bonds yields as well, this group could continue to perform well.

5. Energy 

• Energy is still our top ranked ‘potential’ reward vs risk S&P sector, although this is a higher volatility idea.
• XOP was -.85% and XLE was -.58% on the week.
• Per Finviz data, there were no large cap energy stocks that were positive in 2020, which in our view leaves the door open for significant mean reversion.
• We could be wrong in this view, but the potential upside is far bigger than the downside stops.
• We expect this to be a boom or bust sector in 2021.
• There are a variety of large cap best ideas including BP, COP, CVX, HAL, SLB, VLO, XOM and others. RIG is a more speculative upside idea.
  

MORE INDUSTRY RANKINGS
6. Clean Energy, EVs & Solar – a longer-term disruptive industry, a top growth idea for 2021, and also a volatile group. Renewable energy, EVs, lithium and solar are top industries.
7. Consumer Discretionary – a very diverse group, most retail and consumer spending oriented. BURL, FIVE, NKE, PTON, SBUX, TJX, TGT are top uptrends.
8. Travel, Tourism & Leisure – Along with energy, this is a very high potential reward and higher risk and volatility, which covers a variety of sectors. Airlines, casinos, cruise lines, hotels, and restaurants. AAL, CCL, DRI, EXPE, UAL and WYNN are higher potential R/R ideas.
9. Healthcare – Genomics is our top growth sub-sector here. Pharma could under-perform in a cyclical recovery, but Healthcare overall is a constructive longer-term theme.
10.China Internet – This group is under some political and regulatory pressure here. A top earnings growth sector, but the group could be higher risk here. There were many big breakouts last week, in our highlighted stocks from last week, BIDU, PDD and VIPS.

$SPX WEEKLY
$SPX made a new all-time high last week. $SPX is in a technical uptrend and the 40-week MA has turned up, a bullish technical signal. This market is constructive over 3600 and 3400.

$NDX WEEKLY
$NDX made a new all-time high last week. $NDX is in a technical uptrend and this market is constructive over 12000 and 11000.

$TNX WEEKLY
$TNX  was down slightly on the week. The 40-week MA is flattening out. We have no bond positions, and a longer-term trend reversal in yields to the upside continues to develop here.

GOLD WEEKLY
Gold held over the 40-week MA and $1800 again this week, and is still consolidating. We have no positions in this market, but the longer-term uptrend stays intact over $1800.

WTI CRUDE OIL WEEKLY
Crude oil was up slightly on the week. The 10-week and 40-week MA have both turned up. This market stays constructive over $40 & $44.

This Week’s Best Ideas List Page: https://bluechipdaily.com/members/this-weeks-best-ideas-list/

THIS WEEK’S ETF BEST IDEAS LIST

ARKG, EEM, KRE, QCLN, QQQ, SMH, XLB, XLI, XME, XOP

THIS WEEK’S BEST IDEAS TOP 25 STOCK LIST (Our 2021 Best Ideas List)
*This group could be volatile based on the new year trading.
*Please check earning reporting dates for any names of interest.
AAPL, ALB, AMD, BA, C, CAT, DIS, ENPH, ETSY, EXPE, FCX, GE, LLY, MELI, MS, MT, NVCR, PINS, QCOM, ROKU, SE, SHOP, SLB, TSLA, TWLO

SUMMARY

• Equity markets were higher across the board, on a lower volume holiday week, as outlined above.
• There were new weekly closing highs in open positions: AAPL, FCX, TSLA.
• Top performers off last week’s Top 25 list were: DIS, FCX, TSLA.
• Mid Caps & Spec List: AA, FOUR, MOS, YELP.
• As I have outlined over the last week, the first few days and first week of the new year can be very telling in markets.
• Longer term trends can reverse, in both directions, and last year’s worst performers often out-perform, in something called the January Effect. Observation, not a prediction.
  
• Energy was last year’s worst performing $SPX sector, with zero large cap stocks up on the year, and our Recovery ideas list has other 2020 under-performers.
• These groups could go on to perform poorly, but this remains to be seen.
• Tech, growth and high relative strength stocks are still a core focus for us here. 
• My experience has been that the early movers in the New Year often go on to out-perform.
• I have no predictions here, but will be very focused on any early movers in stocks and or sectors.
• We continue to maintain a balanced approach, for now, between tech & high growth positions, and cyclicals, both in major uptrends and recovery ideas as well.
• Our view remains that a cyclical recovery is underway, and we will be looking for confirmation this week. Once again, this all remains to be seen.
• Healthcare/vaccine news and political developments are still volatility drivers.
• Current cash weighting is at 7%.
• A key reminder: Pullbacks can happen at any time, and the first week of the year can be volatile in both directions.
• Overall, key charts are trending higher, with many all-time highs in the indices. There are many constructive uptrends here in a variety of industries and market caps, based on an intermediate to longer-term time frame – bullish technical price action overall. We will be very focused on the next few days. 

Have a great week,

Larry Tentarelli
Publisher

CORE MARKETS WEEKLY

 ADDITIONAL CHARTS COVERED IN TODAY’S VIDEO